45% of population lives in villages and is engaged in agriculture.
Favorable trade regimes and tax incentives.
Ecologically clean, fertile soil and diverse climate conditions.
Ajara, due to its mountainous terrain, has relatively low percentage of arable land, which is about 25% of its territory (72 862 ha). Around 50% of the population is engaged in agriculture. The main goal of the Agricultural Development Concept of Ajara Autonomous Republic is to improve economic conditions of rural households and satisfy the growing demand for ecologically safe agricultural products. The agriculture has the following strategic objectives to acheive: efficient usage of agricultural lands, value chain development, intensification of production, improving capacity-building and developing infrastructure in the sector.
ADVANTAGES OF AGRICULTURAL SECTOR IN AJARA
- Favourable trade regimes
- Competitive labour force
- Fertile soil and diverse climate conditions
- Income tax – 20%
- Dividends tax – 5%
- Profit tax – 15%
- 0% profit tax on primary production, if turnover is less than 200 000 GEL
- 0% VAT on primary agricultural products
- 0% Property tax (for first 5 years) on newly mastered land
- 0% Property tax on land with the area of 5 hectares and less
Since 2004 several major investments have been made in agriculture processing industry, mainly oriented on tea and citrus processing of local subtropical agriculture. However, considering the region’s profile as a tourist destination, catering and food supply will be in major demand.
It is noteworthy that despite existing potential of fruit and vegetables production, vegetable growing has subsidiary status and is mainly performed by small household farms. Moreover, current annual demand for vegetables and fruits in terms of minimal consumption basket amounts to around 45 000 tons, while only up to 20% of total current demand is produced locally (mainly during the early-summer and autumn period). Shortage is compensated mainly by import from Turkey (potato, tomato, onion, cucumber, pepper, garlic, eggplant). Growth of number of visitors to the region will lead to considerable growth of demand.
Accordingly, there is an urgent need for investment in agriculture and food production. Considering different factors (such as environment, availability of state-owned land for privatization, natural resources), any potential investor has certain opportunities for developing various kinds of successful food production schemes not limited to fruits and vegetables growing.